PAYMENT OF WAGES ACT 1936

Background:
Employees hardship- 1.inordinate delay in receiving wages 2.imposition of fine 3.unauthorised deductions from meager wages .The Royal
Commission on Labour 1929 in India examined problem and made recommendation -Based on rcommendations act passed
Object :
The act was passed a) to ensure the payment of wages in particular forms at regular intervals b).without unauthorised deductions.
Any agreement made before or after the commencement of this act , whereby the an employed person relinquished any rights conferred
by this act shall be null and void.
Application :
Sec 1(2)
employed in any factory
Employed upon by any railway
fulfilling a contract with railway admin

sec1(5)-empowers state govt ext provision.

To any class of persons employed in any industrial estd
In any class or group of industrial estds

The act applies to payment of wages to person

And does not applies to wages payable in respect of wage period if the average wages for such wage periods is more than rs.1000/-a mon to a
person employed .(as u/s 1(b))
Wages Definition- Sec 2 (vi)
All remuneration ( by way of salary , allowances or otherwise ).-to person employed in respect of his employment.
Wages inc.
i)Remuneration INC.
ii) Remuneration not INC
under any award /court order/ settlement b/w parties
- bonus not U/ terms of employment
-w.r.t overtime work / holidays /leave period
-U/order of state govt.excluded-value of any house accomdation
- addl.remuneration U/ terms of emloymentbonus
,light supply ,medical attdnce,other aminety
- sum entitled under the scheme framed U/law in force
-contribution by employer /PF& INT.Accrued to amt.
-travelling allowance /concession
-sum payable to defray spl expenses by nature of employment .
-Gratuity payable on termination of employment .

SEC3:Employer responsible for payment of wages

Factories manager
Industrial estd person who supervises and control ,responsible to the employer
Railways nominated person such as manager ,
SEC 4: Fixation of wage period
Person responsible shall fix such wages for such period as U/sec 3it should not exceed one month .
SEC5:Time of payment done only on working days
Less than 1000 employees: after last day of wages period b4 expiry of 7th day from it
Other cases: after last day of wages period with in 10 days .
Employee terminated :payment b4 expiry of 2nd working day from day of termination
SEC6:Mode of payment
Current coins/current notes /both; by cheque or credit to bank A/C
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SEC 7:DEDUCTIONS
SEC 7:Deductions-Payment made by employed person to employer /his agent
SEC7(1)-Prohibits employers from making deduction except those mentioned U/S 7(2)
If contract any by which employee agrees to deduction which is unauthorized under this act shall be null and void .
SEC7(1)-Expl (II)Deemed not a deduction:
Withholdisssng increment /promotion
Reduction to lower post
Suspensions

SEC7(2)-Authorised Deductions
7(2)(a) .Fines
-on Employees by employer subject to provision U/S 8.of this act
Only For acts and omission prescribed in this act (govt /authority )
- notice specifying A & O exhibited in premises of employment
No imposition of fine to employee-until Opportunity to show cause against it given
-below age of 15.
Total amt of fine not greater than 31/2 paise

7(2)(b)
.Absence from
Duty

Recovery of fine-1). not in installment 2.)not after 60 days from day on which it is imposed.
Record in register-of fine collected ,kept in prescribed manner by responsible person , used for purpose to person
employed in factory /estd as approved by the prescribed authority .(kept in common fund maintained
- r/w sec 9:Authorise employer to make deduction for such
Instances- 1.Absent from place or places where he is required to work under terms of employment
2.Absent for part of day = absent for whole day
3.Absence stay in strike no work carried out
Amount of deduction proportion to period of absence from duty
Sec 9(2)-Proviso -10/more workers-absence in concert w/o due notice or reasonable cause , then deduction amt from 1
person = not exceeding 8 days

7(2)(c)
Damages or
lossof o
property
entrusted

.due to default /neglect by employee

Deduction done in conformity with SEC 10
Amount deducted-not exceed the damage or loss
Opportunity to show cause against it given
Deduction and realization should be recorded in register

7(2)(d).House
accommodation

Provided by employer /govt/any housing board .

Deduction shall not be made until accepted as term of employment
Amount of deduction shall not exceed amt equivalent to value of accommodation

7(2)(e)
Amenities and
services

Deduction made inconformity with SEC11

Services shall not include the supply of tools and raw materials required for the purpose of employment .

7(2)(f)Recovery
of advances

INC.T.A+C.A+Interest due on advances

Advance made before employment from 1st payment of wages in case of complete wage period (no deduction for
traveling expenses)
Advance made after the employment as per condition laid down by state Govt.
Advance of wages not already earned Subj to rules by state Govt regul.ext of advance to be given +instalment for
realization
+interest from any fund constituted for labour welfare in acc rules of state Govt.(from wages )

7(2)(ff)
Recovery of
loans
7(2)(fff)
Recovery of
building loans
7(2)(g)Income
Tax
7(2)(h) Order
of court
7(2)(i) From PF
7(2)(J)(K)- cooperative
societies

+interest- Subj to rules by state Govt regul.ext of loan to be given +rate of interest payable.(wages)
-from wages Recovered in 12 Monthly Installments
-from wages
payment to co-operative societies recog under provident fund Act 1925/State Govt
Subj to conditions approved by state govt .
For payment to co-operative societies approved by state Govt .
-To Insurance scheme maintained by Indian Post Office .
-Payment on premium of life insuarance (written authorization of employed person )
-Purchase of securities of Govt Of India
-Deposit in any post office savings bank
Subj to conditions approved by state govt .

7(2)(l)
7(2) Recovery
Of Lossessustained by
Railway Admin

7(2)(p)
.

Insurance Premium or fidelity gurantee bond.

(m)--Losses on A/C of acceptance of counterfeit / base coins mutilated/ forged currency notes
(n)-Losses on A/C of failure to invoice , to bill, to collect; charges due- respect of fares , freight , demurrage , wharfage,
carnage; respect of sale of food in catering estd / commodities in grain shops.
(o)- Losses on A/C of rebate /refund incorrectly granted by employed person (default/ neglect)

Contribution to P.M.National Relief Fund (written authorization of employed person )

Limit Of Deduction
SEC7(2)-Deduction under this sec should not exceed
1.75% of such wages-where payment wholly /partly to be made to co-operative societies .
2.50% in other cases
SEC7(3)-Total deduction from wages due to employed persons
SEC7(4)-Recovering from wages of employee any amt payable by such person under any law for the time being in force except Indian
Railways Act .
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AUTHORITIES UNDER THE ACT
Sec14 (1)(2)(3)
Act empowers state Govt to appoint Inspectors to enforce provisons of this act and inspector U/factories act are assigned fns u/Act
Appointment of inspectors in respect of employed persons of railway admin to whom this act applies
The govt may dfine the local limits within which the class of factories and Indus.estd in respect of which inspector shall exercise fn.
Powers of Inspectors
1. Examine and enquire provisions of act and Rules thereunder compiled .
2. Enter, Inspect, search any premises-of rly,facty,Indus.estd-@any reasonable time with or w/o such assistance
3. Supervise payment of wages in rly,facty,Indus.estd-to employed person
4. Require by written order production of any register /record or take on spot or statement of any person .
5. Seize/take copies of register/document /operation-in respect of offence believed to committed by employer U/this act .
6. Exercise such other power that may be prescribed.
*They cant compel person to make statement ,in case of search/seizure .they are deemed to be public servant within meaning of IPC.
SEC 14(A)-Facilities Reasonable facilities for entry, inspection, supervision , examination provided.
Payment Of Wages Authority -SEC 15
State Govt - empowered to appoint the authority by issue of notification in official gazette
Authority Entrusted with power to claim hear and decide all claim arising out of deduction from wages, delay in payment of wages to
employees in that area ,inc.all matters incidental to such claims
SEC 15(1)-Who May Be Appointed As Authority
1. Presiding officer of any Labour Court /Indus.Tribunal under I.D.Act
2. Commissioner for workmen compensation
3. Officer with experience of judge of civil court /stipendary magistrate
SEC 15(2)-who can Make Appln
1. The employed person.
2. Any legal practitioner
3. Any official of registered trade union authorized in writing in his behalf
4. Any inspector under this act
5. Any other person with permission of authority
SEC 16 - Single appln can be made w.r.t employees belonging to same unpaid group
SEC 15(2)-Proviso stateGovt appoint more than one payment of wages authority for same specified area &order specify distribution or
allocation of work to be performed by them .
SEC 15 (2)-PROVISO 1 -It should be made with in one yr from which date deduction from wages was made/payment of wages due to him .
*General Manager North Eastern Rly Vs.Suraj Nath Dubey
Whether employee suspended ,removed or dismissed .wages becomes due to him only when such action is declared void.he cant have cause of
action b4 dateof such declaration
*Divisional Superindent Northern Rly Vs.Puskardett
Employee dismissed .dismissal declared void in civil court.on appeal decree set aside.2nd appeal by employee the decree of trial court restored on
9th jan 1962.spl appeal against this also dismissed.Employee filed an appln on july1962 claiming past wages due to him B/W 1947-1962.S.C held
that the employee was entitled to all such wages when 2nd appeal was allowed in 1962 and when he became entitled to cause of action .
* sawnuy Vs. U.O.I
The period of limitation commences to run when the wages accrue due and when in law the servant become entitled to wages
SEC 15 (2)-PROVISO 2-Power of payment of wages authority to admit an appln even after period of limitation providd there is sufficient cause
for not making the appln given by applicant
* Prem Narayan Amirthlavarma Vs.Divisional Traffic Mnager .Jaichand
The question of condon of delay can be decided after hearing boththe parties and not before it
* sitaramVs.Nagrasana
Sufficient cause is not a mere personal opinion of authority it must be decided by applying proper legal principles.
*Anant ram Vs.Asst.Engineer Lab IC
Parties fully participated in proceedings without raising objection as to limitation .so it is deemed as if there is implication and as such the
authorities cant permit theopposite party to agitate the question of limitation .

Jurisdiction Of Payment Of Wages Authority

The Authorities decides the following Question
1. Any wrongful deduction
2. Delay in payment of wages
3. Matters incidental:a) Determination of what the wages of employees
b) Find terms of contract B/W employer and employee
c) Find relationship if any initially B/W employer and employee
d) whether appln u/s15 (2) time barred or there is condone of delay
A.V.D.Costa Vs. B.C.Patel
No jurisdiction -Cant decide controversy which does not fall within the ambit of provision of act eg. Only actual wages cant decide potential
wages .reg bonus payable refusal to pay-outsid scope of jurisdiction.
North Eastern Rly Vs.Durga Prasad
No jurisdiction-to decide whether service of employee has been rightly or wrongly terminated
Viswanath Vs.Gen.Manager Eastern Rly.
Retrenchment/other legality /undertaking of closure/lockout not within jurisdiction .
Payment of wages Inspector ,Ujjain Vs.Suraj Mal Mehta
jurisdiction-to decide Matters incidental.
Kamal Prasanna Vs. Mauriee Hyam
.If enquiry prolonged in Matters incidental. the court should refuse to exercise jurisdiction
Rgunathammal Bank Vs.Labour Court
Wages above the stipulated wages rs.400(1000 now)- not within jurisdiction .
Territorial Jurisdiction
Liabiliy for payment of wages Arises at place where wages are paid /payable..In absence of such, the place of residence of employer.
PROCEDURE FOR DECIDING CLAIMS SEC 15(3)
1.
2.
3.
4.

Appln :Claim appln presented U/S15(2)disposed as per procedure under this .

Notice :given by Authority to employer or person responsible for payment of wages
Opportunity to hear : given to employer
Enquiry and compensation :By the authority on employer followed by directing the employer to refund the concerned amt wrongly
deducted /pay the delayed wages 1.Direct payment of compensation in wrongful deduction =10x(wages)
2.delayed payment =Rs.25/- if claim appln is more, then max.compensation ltd to Rs.10/-per employee
No Compensation for delayed wages If delay was due to
i. A bonafide error or dispute
ii. Occurrence of emergency or existence of extraordinary circumstances
iii. Failure of employee to accept the payment
* Sec 15(4)(a) If appln is malicious or vexacious a fine not exceeding Rs.50/- to be paid to the employer
* Sec 15(4)(b) If authority comes to conclusion to pay compensation it may impose penalty not exceeding Rs.50/- to be paid by the employer or
other person responsible for payment of wages, to state Govt.
* Sec 15(4-A) Dispute as to the person being legal rep.of employer/employee ,decision of authority is final
*Sec 15(4-B) .enquiry under this shall be deemed to be judicial proceeding with the meaningof sec 193,219,228 of IPC.
Recovery Of Amount SEC15(5)
If authority is Mgistrate ,trated as if fine were imposed by him as magistrate
If authority is not Mgistrate ,by any magistrate to whom appln made by authority ,treated as if the fine were imposed by the magistrate.
Power Of Authority
The Authority shall be deemed to be a civil court for all purposes under sec195 of cpc and shall have powers of civil court
1. Taking evidence
2. Enforcing attendance of witnesses
3. Compelling the production of document
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APPEAL SEC 17
From the following orders and directions of payment of wages by authority an appeal can be preferred
I. Order directiong employer or to the persons responsible to refund deduction wrongfully made /pay delayed wages
II. Order directing payment of compensation to the employee U/S 15(3)
III. Order Imposing penalty U/S 15(4)
Time :Appeal can be made within 30 days from the date on which the ordr or direction appealed against was made.
Place:In presidency town before the court of small causes and in other places before district court within which jurisdiction industrial estd is
situates

Who can appeal .

1.By Employer /Person responsible Sec 17(1)(a)
If the total sum directed to be paid by way of wages and compensation exceed Rs.300/Such direction has the effect of imposing on the employer /other person a financial liability exceeding Rs.1000/2.By Employee/Legal practioner /an official of regd.trade union authorized in writing in this behalf/Inspector /Any other person
permitted by authority Sec 17(1)(b)
If the total amt of wages claimed to have been withheld from the employed person exceed Rs.25/From the unpaid group to which the employed person belongs or belonged exceeds Rs.50/3.By person directed by authority to pay penalty U/S 15(4) Sec 17(1)(c)
Filing :Appeal must be accompanied by certificate by the authority specifiying that appellant has deposited the amount payable under the
direction appealed against.
Sec 17(2)- An order made by the authority for the appln made by employee is final unless an appeal is made against order or direction .
Sec 17(3)- When employee prefers an appeal ,pending decision of appeal the authority withhold the payment of any sum in deposit in it .
Sec 17(4)- The court of appeal may if thinks fit submit question of law for decision of H.C .And decide the matter in conformity with the
decision of H.C.
on ground of default: Appeal filed U/S 17 cannot be dismissed on mere ground of default of the appellant .(as U/CPC Rule 17 Order XLI )it
shud be decided on merits as U/Rule 12 of the Act
The act does not contemplate a right of 2nd appeal .However a revision appln U/S 115 OF CPC is maintainable to the High Court .
*J.R.Puraswami Vs. S.G.Shukla
Appeal filed U/S 17 cannot be dismissed on mere ground of default.
*N.E.Railway Vs. P.N.Tiwari
Authority U/S 15 is not a court but U/S 17 is a court and persona designate
Attachment Of Property Sec 17A ; procedure of attachment (as cpc)- sec 17-A(2)
After filing claim appln /after an appeal preferred ,decision has been taken on satisfaction by the authority that when the person responsible to
make payment likely to evade directing the attachment of somuch of property of the employer /other person sufficient to satisfy the amout
payable under such direction.
Attachment order made after hearing the concerned persons and satisfied of having necessity of such an order so as to prevent the evasion of
payment under the act .

PENALTY FOR OFFENCES UNDER THE ACT

SEC20(1)-Fine-upto 500/-if
a. Delay in payment of wages with in prescribd period
b. Deduction made in contravention of sec 7,9,10,11,13.
c. Imposition of fine in contravention of the Act .

SEC20(3)- Fine-upto 500/-if

a. Fails to maintain recs and registers
b. Willfully refuses /w/o lawful excuse neglect to furnish such
info/return
c. Wilfully furnishes /causes to be furnished any info /return
which is false
d. Refuses to answer /willfully gives false answer.
If norules on part of industrial estd to maintain rec&register [S.13A]
When called upon for inspection U/S.14 then he cant be made liable
for offence commission under the Act .
J.C.Ghosh Vs.Bhattacharya
Employee convicted and penalized .But H.C held that Rules under
Assam Payment of wages 1937 there is no obligation to maintain .

SEC20(2)- Fine-upto 200/-if

a. Not fixing the wage period in acc with s.4
b. Not making payment on working days as required by S.5(4)
c. Not paying the wages in current coins or currency or both U/S
6.
d. Not REC.in the register 5ns and realization and not making
beneficial use as U/S 8(8) but making default
e. Not REC.in the register deduction made for damage /loss
from wages of employees U/S10(2)
f. Not displaying the abstract of the act/rules in fac as U/S 25.

SEC20(4)-Fine-upto 500/-if
a. Wilfully obstructing inspector in the discharge of his duties
b. Refusing /willfully neglectingan inspector to afford facility for
making any inspection, examination, supervision or enquiry .
c. Wilfully refuses to produce on demand to any inspector any
register or document kept in pursuance of this act.
d. Prevents /attempts to prevent /does anything which its likely
to prevent any person from appearance or examination by
inspector acting under the act

Enhanced punishment
SEC20(5)Repeatation of offence within period of two years Imprisonment :3 months or fine-upto 1000/- or both .
SEC20(6)Failure or willfully neglects to pays the wages within fixed date addl fine upto 50 /- for each day .

Procedure In trial Of Offence SEC 21(1).

Complaints entertained only when a claim appln has been filed .Following it the appellate court grant it wholly or in part and sanction making
the complaint. B4 granting sanction against opportunity given to the person to show cause .The authority shall not grant if default was due to
1. bonafide error or dispute
2. Occurrence of emergency or existence of extraordinary circumstances
3. Failure of employee to accept the payment
U/S 21(3)- court take cognizance of following offence when made by Inspector/any person with his sanction
1. Not fixing the wage period in acc with s.4
2. Not paying the wages in current coins or currency or both U/S 6.
3. Non compliance with any rule and the act
4. Contravention of Sec 20(3)
5. Contravention of Sec 20(4)
U/S 22- Bar Of Suits
The amt claimed form subj matter of appln pending before the authority U/S 15
The amt claimed form subj of direction U/S 15 in fav of plaintiff
The amt claimed has been adjudged in a proceeding U/S 15 not to be owed to the plaintiff.
The amt claimed could have been recovered by appln U/S 15.
North Eastern Rly Vs.Durga Prasad
Case with respect to wages during the subsistence of relationship of employer and employee B/Wparties .Therefore sec 15 of the Act would be
clearly applicable and that a civil suit is barred under sec 22.
MSRT Corp Vs. R.H.Lad
Suit for recovery of arrears of pay , PF,gratuity or bonus pending claim appln U/S 15 is not barred .
U/S 22-A-Protection of action taken in good faith
Immunity from suit , prosecution or other legal proceeding-to govt /any officer for anything done in good faith .
U/S 23 Contracting Out Prohibited
Any agreement made before or after the commencement of this act , whereby the an employed person relinquished any rights conferred by this
act shall be null and void.Right to
1.to receive wages 2.at proper time 3.without unauthorized deduction .
U/S 24 Appln of Act to Railways, mines etc
U/S 25-Display by notice of abstracts of the act
RULE MAKING POWER SEC26
State govt to make rules regulating the procedure to be followed by authorities and appellate court for carrying out provisions of the Act .
1.Maintain rec and Register
2.Display in premises w.r.t rates of wages payable to employed person
3.Inspectn of weights, measures ,&weighing machine used in ascertaing wages
4.Manner of Notice given for the payment of wages
5.Acts and ommisions in respect of which fines mey be imposed. U/S 8(1)
6.Procedure for imposition of fine U/S 8 and deduction U/S 10
7. Condition subj to which deduction made U/Pro of sec 9(2)
8.Subj to which proceeds of the fines may be imposed.
9.Ext to which advances made and recover in instalment w.r.t. S.12
10 . Ext to which loan made and rate of interest payable w.r.t.s 12-A
11.Prescribe the power of the inspector
12.Regulate the scale of cost allowed in proceedings.
13. Prescribe the amt of court fee payable .
14. . Prescribe the abstract to be present in the notices.
15. provide any other matter to be prescribed.
All rules made shall be subj to previous publication &date on which such rules shall come into force not less than 3 mon from the date on which
the draft rules are published . SEC26(2)
Central govt-Rules made are placed before both the houses.If before the expiry of 30 days both houses agree that any rule should be modified or
annulled it become effective thereafter .it does not affect anything done previously done. SEC26(3)